December 27, 2012

Tax's Perfect Storm

Yesterday was not a fun day.

It had nothing to do with it being the day after Christmas
or that it was bitterly cold here. The problem was I couldn’t do my job. The reason
is the fiscal cliff.

I received several calls from clients with questions I couldn’t
really answer. I could explain about how the fiscal cliff is leaving the fate
of tax rates, deductions and credits hanging. I could point out that AMT has
expired and if it’s not extended by the end of the year the client could get a
nasty tax surprise. But I couldn’t give them the answer they needed. All I
could do for my clients was to give them a very rough estimate with the warning
that there was a good chance I would be wrong. Not what clients expect of me.

The other problem I had yesterday, and to a lesser degree
today, was that I can’t get motivated to get pre-season work done. If there is
not AMT patch, the start of tax season will be delayed. Acting IRS Commissioner
Steven Miller has been telling Congress that since November. Normally this time
of the year, I would be working on my newsletter updating office documents and checking
supplies. Some of that can be done without knowing what Congress will do. But I
can’t get motivated. Why do it now when I’ll probably have until March to get
it done?

Congress only has 4 days to do something about taxes (if
they’re willing to work the weekend). And the situation has gotten more
complicated with Treasury Secretary Geithner’s announcement that the US will
reach our debt ceiling on December 31st. 4 days to do what they refused to do earlier in
the year and haven’t been able to do in the last few weeks. I’m not hopeful.

The House has spent most of the year on vacation. They’ve
only worked about 100 days this year. I’d like to take a vacation for a few
days to get away from the depressing tax news. It would be worth catching up
missed work if a miracle happens and we get a compromise. But a vacation costs
money I should save to the pay bills that will still come in if the tax season
is delayed.

At least we’re getting a story to tell young preparers years
from now when they complain something Congress has done (or not done). “You
think this is bad, you should have been in business during the Fiscal Cliff of
2012-13. That was the tax world’s perfect storm.”

Disclaimer

Disclaimer

A reader should seek advice from an independent tax adviser with respect to the information on this blog based on the reader’s particular circumstances. This advice is intended to be general information and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS regarding the transaction or matters discussed here.